Which of the Following Statements Regarding Perpetuities Is FALSE

question 34

Multiple Choice

Which of the following statements regarding perpetuities is FALSE?

• A)To find the value of a perpetuity one cash flow at a time would take forever.
• B)A perpetuity is a stream of equal cash flows that occurs at regular intervals and lasts forever.
• C)PV of a perpetuity =
• D)One example of a perpetuity is the British government bond called a consol.

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Definitions:

Population Parameter

A value, such as a mean or standard deviation, that describes a characteristic of an entire population.

Normal Distribution

A distribution pattern in probabilities that is balanced around the mean, signifying that data points near the mean have a higher frequency of occurrence compared to those far from the mean.

T Distribution

A probability distribution that arises when estimating the mean of a normally distributed population in situations where the sample size is small and the population standard deviation is unknown.

Degrees of Freedom

The number of independent values or quantities which can vary in an analysis without breaking any constraints.